Oversea-Chinese Banking Corp’s 1QFY2025 net profit of $1.88 billion fell 5% y-o-y but rose 12% q-o-q and met the Street’s estimate of $1.86 billion. Earnings were boosted by Great Eastern Holdings, trading income and fees.
Net interest income for 1QFY2025 was 4% lower q-o-q at $2.35 billion due to lower net interest income (NIM) which contracted by 11 basis points (bps) to 2.04%, as loan yields tightened at a faster pace than deposit costs.
Assets grew by 3% and the group deployed liquidity into high-quality assets (HQLA), which were income-accretive but lower yielding.
Fee income rose 6% q-o-q to $546 million on the back of increased customer activities which boosted wealth management, brokerage and fund management, as well as loan-related and investment banking fees.
Trading income improved 31% q-o-q to $396 million, from higher customer flow and non-customer flow treasury income. Insurance income, mainly from Great Eastern Holdings, more than doubled during the quarter to $306 million.
Low capital-consuming, high-ROE wealth management income gained 6% q-o-q to $1.37 billion, contributing 38% to its total income. Wealth management AUM was rose 2% q-o-q to $306 billion by end-March.
Non-performing assets (NPA) as at end-March were $2.92 billion, down 4% y-o-y but up 2% q-o-q due to new corporate NPA formation which were partially offset by net recoveries and upgrades, and the impact of foreign currency translation.
Non-performing loan (NPL) ratio was 0.9%, unchanged q-o-q but down slightly y-o-y. Allowance coverage for total NPAs was higher at 162%.
On the credit cost front, total allowances for loans and other assets were $212 million in 1QFY2025. Allowances for impaired assets of $94 million were lower q-o-q and y-o-y. The group set aside $118 million for general allowances for non-impaired assets taking total credit costs in 1QFY2025 to 24 bps.
Group CEO Helen Wong says the heightened uncertainties brought about by the shifts in trade policies and geopolitical risks are expected to have a dampening effect on overall economic growth in the region.
"As the situation continues to unfold, we remain watchful and vigilant in managing risks.
"With our strong balance sheet and capital position, we have the ability to navigate complexities while supporting our customers throughout our
network," she adds.
OCBC shares closed at $16.16 on May 8, down 0.68% for the day and down 2.88% year to date.
